(Un)Harnessing AI

The interim report by the Productivity Commission on Harnessing Data and Digital Technology - consistent with the national government's enthusiasm for AI - can be read as proposing a looser regulatory framework. 

The report states 

Data and digital technologies are the modern engines of economic growth. Emerging technologies like artificial intelligence (AI), which can extract useful insights from massive datasets in a fraction of a second, could transform the global economy and speed up productivity growth. 

 

Australia needs to harness the consumer and productivity benefits of data and digital technology while managing and mitigating the downside risks. There is a role for government in setting the rules of the game to foster innovation and ensure that Australians reap the benefits of the data and digital opportunity. 

 

The economic potential of AI is clear, and we are still in the early stages of its development and adoption. Early studies provide a broad range of estimates for the impact of AI on productivity. The Productivity Commission considers that multifactor productivity gains above 2.3% are likely over the next decade, though there is considerable uncertainty. This would translate into about 4.3% labour productivity growth over the same period. But poorly designed regulation could stifle the adoption and development of AI and limit its benefits. Australian governments should take an outcomes based approach to AI regulation – one that uses our existing laws and regulatory structures to minimise harms and introduces technology specific regulations as a last resort. 

 

Data access and use can fuel productivity growth: insights from data can help reduce costs, increase the quality of products and services and lead to the creation of entirely new products. But some requirements in the Privacy Act, the main piece of legislation for protecting privacy, are constraining innovation without providing meaningful protection to individuals. For example, complying with the controls and processes baked into the Act can make consent and notification a ‘tick box’ exercise – where businesses comply with the letter of the law but not the spirit of it. The Australian Government should amend the Privacy Act to introduce an alternative compliance pathway that enables firms to fulfil their privacy obligations by meeting outcomes based criteria. 

 

Data about individuals and businesses underpins growth and value in the digital economy. But often those same individuals and businesses cannot easily access and use this data themselves. Under the right conditions, giving people and businesses better access to data that relates to them can stimulate competition and allow businesses to develop innovative products and services. A mature data sharing regime could add up to $10 billion to Australia’s annual economic output. 

 

Experience shows that we need a flexible approach to facilitating data access across the economy, where obligations placed on data holders and the level of government involvement can match the needs and digital maturity of different sectors. New lower cost and flexible regulatory pathways would help to guide expanded data access throughout the digital economy, focusing first on sectors where the gains can be significant and relatively easy to achieve. 

 

Financial reports provide essential information about a company’s financial performance, ensuring transparency and accountability while informing the decisions of investors, businesses and regulators. Government can further spark productivity by making digital financial reporting the default – that is, mandatory lodgement of financial reports in machine readable form. At the same time, the Australian Government should remove the outdated requirement that financial reports be submitted in hard copy or PDF format. This change would increase the efficiency and accuracy with which information is extracted and analysed.

The  draft recommendations are

 Artificial intelligence 

Draft recommendation 1.1 Productivity growth from AI will be built on existing legal foundations. 

Gap analyses of current rules need to be expanded and completed. Australian governments play a key role in promoting investment in digital technology, including AI, by providing a stable regulatory environment. Any regulatory responses to potential harms from using AI must be proportionate, risk based, outcomes based and technology neutral where possible. 

The Australian Government should continue, complete, publish and act on ongoing reviews into the potential gaps in the regulatory framework posed by AI as soon as possible. 

Where relevant gap analyses have not begun, they should begin immediately. 

All reviews of the regulatory gaps posed by AI should consider: • the uses of AI • the additional risk of harm posed by AI (compared to the status quo) in a specific use case • whether existing regulatory frameworks cover these risks potentially with improved guidance and enforcement; and if not how to modify existing regulatory frameworks to mitigate the additional risks. 

Draft recommendation 1.2 AI specific regulation should be a last resort 

AI specific regulations should only be considered as a last resort for the use cases of AI that meet two criteria. These are: • where existing regulatory frameworks cannot be sufficiently adapted to handle the issue • where technology neutral regulations are not feasible.   

Draft recommendation 1.3 Pause steps to implement mandatory guardrails for high risk AI 

The Australian Government should only apply the proposed ‘mandatory guardrails for high risk AI’ in circumstances that lead to harms that cannot be mitigated by existing regulatory frameworks and where new technology neutral regulation is not possible. Until the reviews of the gaps posed by AI to existing regulatory structures are completed, steps to mandate the guardrails should be paused. 

Data access 

Draft recommendation 2.1 Establish lower cost and more flexible regulatory pathways to expand basic data access for individuals and businesses 

The Australian Government should support new pathways to allow individuals and businesses to access and share data that relates to them. These regulatory pathways will differ by sector recognising that the benefits (and the implementation costs) from data access and sharing are different by sector. This could include approaches such as: • industry led data access codes that support basic use cases by enabling consumers to export relatively non sensitive data on a periodic (snapshot) basis • standardised data transfers with government helping to formalise minimum technical standards to support use cases requiring high frequency data transfers and interoperability. 

These pathways should be developed alongside efforts that are already underway to improve the Consumer Data Right (which will continue to provide for use cases that warrant its additional safeguards and technical infrastructure) and the My Health Record system. 

The new pathways should begin in sectors where better data access could generate large benefits for relatively low cost; and there is clear value to consumers. Potential examples include: • enabling farmers to combine real time data feeds from their machinery and equipment to optimise their operations and easily switch between different manufacturers • giving tenants on demand access to their rental ledgers which they can share to prove on‑time payments to new landlords or lenders • allowing retail loyalty card holders to export an itemised copy of their purchase history to budgeting and price comparison tools that can analyse spending and suggest cheaper alternatives. The scope of the data access pathways should expand over time based on industry and consumer consultation, where new technology, overseas experience or domestic developments show that there are clear net benefits to Australia.   

Privacy regulation 

Draft recommendation 3.1 An alternative compliance pathway for privacy 

The Australian Government should amend the Privacy Act 1988 (Cth) to provide an alternative compliance pathway that enables regulated entities to fulfil their privacy obligations by meeting criteria that are targeted at outcomes, rather than controls based rules. 

Draft recommendation 3.2 Do not implement a right to erasure 

The Australian Government should not amend the Privacy Act 1988 (Cth) to introduce a ‘right to erasure’, as this would impose a high compliance burden on regulated entities, with uncertain privacy benefits for individuals. 

Digital financial reporting 

Draft recommendation 4.1 Make digital financial reporting the default 

The Australian Government should make the necessary amendments to the Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth) to make digital financial reporting mandatory for disclosing entities. The requirement for financial reports to be submitted in hard copy or PDF format should also be removed for those entities.

It goes on

AI specific regulation should be a last resort 

AI specific regulations should only be considered as a last resort for the use cases of AI that meet two criteria. These are: • where existing regulatory frameworks cannot be sufficiently adapted to handle the issue • where technology neutral regulations are not feasible. 

Economy wide efforts to regulate AI should be paused until all gap analyses are complete and implemented 

In August 2024 Australian Government Department of Industry, Science and Resources released a set of 10 voluntary AI safety standards, or guardrails, based on risk management standards such as ISO/IEC 42001:2023 (Information technology – Artificial intelligence – Management system) and the National Institute of Standards and Technology’s Artificial Intelligence Risk Management Framework (AI RMF 1.0) (DISR 2024b, p. 5). The guardrails cover aspects of AI development and application. They require several risk-management processes. These include testing of models, developing a risk plan and providing transparency to users of AI tools and owners of copyrighted materials used in the training of models. The guardrails outline reasonable risk-management practices for many organisations. In this way they have served a very important and useful step in AI governance in Australia by equipping businesses with voluntary, structured and internationally recognised standards to support and guide their adoption of AI. 

The guidelines are very useful for smaller businesses without comprehensive risk-management procedures in place. Indeed, submissions from participants to this inquiry (and submissions to the mandatory guardrails – discussed below – consultation process ) showed that many larger organisations have implemented risk management protocols that are similar in spirit to these guardrails. 

Mandating the guardrails is not necessary 

In September 2024 (DISR 2024a) a proposals paper for a set of mandatory guardrails for AI in high risk settings was released by the Australian Government. The proposal is to turn the voluntary guidelines into mandatory regulations for AI development and application. 

The PC is concerned with two aspects of the guardrails being made mandatory. First, the proposals paper argued that the mandatory guardrails would apply to all high risk uses of AI – regardless of whether risks can be better mitigated through outcomes based regulations. Second, the proposals paper argued that General Purpose AIs – which would include many generative AI tools – above a certain threshold of capability be classified as high risk by default. The proposals paper did not argue for any particular measure or threshold for technical capability, though it could include aspects like FLOPS (DISR 2024a, p. 18). It was argued that these models can perform so many functions that their risks cannot be adequately foreseen. This could result in the guardrails being applied to common generative AI tools such as ChatGPT, Claude and Grok, depending on what is chosen as the threshold and measure of technical capability. 

In general, high risk uses of AI can be split into three broad types. 

1. High risk uses that can be adequately controlled by existing regulatory frameworks (potentially with some modification) – this could include issues with privacy law (which the PC thinks can be resolved within existing frameworks with modification to make the regulations more outcomes focused, chapter 2). 

2. High risk uses that can be adequately controlled with new technology neutral regulations – this could include (non consensual) sexually explicit deepfake images which the Australian Government has recently banned (through the Criminal Code Amendment (Deepfake Sexual Material) Act 2024). 

3. High risk use cases that require technology specific regulations – these would be use cases identified in the various gap analyses as having no technology neutral solution. 

The PC’s concern with the guardrails is that they would not distinguish between these categories. This in our view raises significant issues, as the first two cases can already, by definition, be dealt with adequately by other regulatory mechanisms. It might also result in most commercial chatbots being classified as high risk regardless of the efficacy of existing regulations. The result of this approach is that many AI models would be complying with two different sets of regulation to achieve the same outcome. 

For example, the TGA’s review noted that with respect to medical devices, all ten proposed guardrails had close parallels in existing regulations (2025, pp. 27–30). That is, it is likely that firms providing AI based medical devices in Australia would already be fulfilling the objectives of the guardrails if they are operating legally under the TGA’s existing regulations. But if the guardrails are mandated, then the provider of the medical device would need to demonstrate compliance with the TGA regulations and the guardrails, raising the regulatory burden with no change in outcomes. 

The mandating of the guardrails is only appropriate in circumstances where existing regulatory frameworks or new technology-neutral regulations are not able to adequately mitigate the risk of harm. Once the Australian Government has completed and acted on all gap analyses of its existing policy framework, it will know what regulatory holes cannot be plugged by existing frameworks or new technology neutral legislation. Consideration of economy wide efforts to mandate the guardrails should be paused until these gap analyses are complete. 

Pause steps to implement mandatory guardrails for high risk AI The Australian Government should only apply the proposed ‘mandatory guardrails for high risk AI’ in circumstances that lead to harms that cannot be mitigated by existing regulatory frameworks and where new technology neutral regulation is not possible. Until the reviews of the gaps posed by AI to existing regulatory structures are completed, steps to mandate the guardrails should be paused.

In dealing with copyright the PC states 

 Copyright violation is an example of a harm that AI could exacerbate by changing economic incentives. Previous waves of innovation in information and communication technology have made the sharing of copyrighted materials much cheaper and easier, creating challenges for copyright. In most instances, copyright law was able to be adapted (or better enforced) to mitigate the harm. This made it unnecessary to directly regulate technology by, for example, regulating computer software or hardware to prevent copyright breach. It is the PC’s view that the copyright issues posed by AI can also similarly be resolved through adapting existing copyright law frameworks rather than introducing AI specific regulation. 

What is copyright? 

Copyright law prohibits a person from using original works without the permission of the copyright holder – usually the author (AGD 2022a). The types of works that are protected include text, artistic works, music, computer code, sound recordings and films (ACC 2024a). It does not protect the underlying ideas or information (AGD 2022a). In some cases, data and datasets may be protected, ‘largely depend[ing] on how the data has been arranged, structured or presented’ (Allens 2020, p. 3).  

The rise of AI technology has led to new challenges for copyright law. 

The emergence of AI also raises some additional, principle based questions about how the copyright framework (as part of Australia’s broader intellectual property regime) works to benefit society by encouraging creation and innovation, rewarding intellectual effort and achievement, and supporting the dissemination of knowledge and ideas. (AGD 2023c, p. 12) 

In 2023, the Attorney General established the Copyright and Artificial Intelligence Reference Group, which acts as ‘a standing mechanism to engage with stakeholders across a wide range of sectors on issues at the intersection of AI and copyright’ (AGD 2023a). Since then, the group has met on several occasions to discuss issues relating to AI technology and copyright law (AGD 2023a). 

This section explores one issue particularly relevant to productivity: whether current Australian copyright law is a barrier to building and training AI models. There are other legal issues relating to the outputs of AI models that are less relevant to productivity – such as whether those outputs attract copyright protection and what happens when AI outputs infringe a third party’s copyright (Evans et al. 2024). 

Training AI models 

Building and refining AI models requires the use of large amounts of data. 

The term ‘AI model training’ refers to this process: feeding the algorithm data, examining the results, and tweaking the model output to increase accuracy and efficacy. To do this, algorithms need massive amounts of data that capture the full range of incoming data. (Chen 2023) The datasets used to train AI models often contain digital copies of media such as web pages, books, videos, images and music. These media are often the subject of copyright protection, which means that their use to train AI models requires permission from the copyright holder. 

Permission is required because AI models must ‘copy’ the protected material at least temporarily to undertake the training process. The use of copyrighted materials to train an AI model is a separate issue to the copyright status of anything the model produces. As discussed above, AI outputs may have their own copyright challenges. 

A survey of the Copyright and Artificial Intelligence Reference Group indicated that, in practice, a range of copyrighted materials are used to train AI models – including literary and artistic works, sound recordings, films and musical works (AGD 2024, p. 12). 

There is evidence to suggest that large AI models are already being trained on copyrighted materials without consent or compensation (APA and ASA, qr. 39, pp. 3–4; APDG, qr. 6, p. 4; APRA AMCOS, qr. 58, p. 4; ARIA and PPCA, qr. 65, p. 5, Creative Australia, qr. 62, p. 3). It should be noted that Australian copyright law only applies to copying that occurs within Australia’s boundaries – in other words, the training of AI models overseas is subject to the relevant laws of the jurisdiction in which it occurs. Lawsuits have been brought against technology companies – including Meta, Microsoft and OpenAI – in some overseas jurisdictions about the unlicensed use of copyrighted works to train AI models (Ryan 2023). 

There are concerns that the Australian copyright regime is not keeping pace with the rise of AI technology – whether because it does not adequately facilitate the use of copyrighted works or because AI developers can too easily sidestep existing licensing and enforcement mechanisms. There are several policy options, including: • no policy change – that is, copyright owners would continue to enforce their rights under the existing copyright framework, including through the court system • policy measures to better facilitate the licensing of copyrighted materials, such as through collecting societies • amending the Copyright Act to include a fair dealing exception that would cover text and data mining. 

The PC is seeking feedback on what reforms are needed to bring the copyright regime up to date. 

Is there a need to bolster the licensing or enforcement regime? 

Several participants expressed concern about the unauthorised use of copyrighted materials to train AI models. For example, Creative Australia said: Much of the data has been used reportedly without consent from the original creator, and without acknowledgement or remuneration. The global nature of the technology industry has made it difficult for the owners of creative work to enforce their intellectual property rights and be remunerated for the use of their work. (qr. 62, p. 3) 

There are two points at which concerns of this type could be addressed. First, they could be addressed before the fact, through copyright licensing. Licensing is the key mechanism through which a copyright holder grants permission for others to use their work and often involves some form of payment. In Australia, licensing is often done through collecting societies, which are organisations that represent copyright holders. This can streamline the licensing process, because the collecting society can negotiate licences on behalf of multiple copyright holders at once. As the Copyright Agency said: We can help these sectors use third party content for AI related activities. Our annual licence for businesses now allows staff to use news media content in prompts for AI tools (e.g. for summarisation or analysis). We are extending this to other third party content later in the year. We are also in discussions with our members and licensees about other collective licensing solutions, including the use of datasets for AI related activities. (qr. 7, pp. 2–3) 

The issue of unauthorised use of copyrighted materials could also be addressed after the fact, through enforcement. This encompasses a range of possible measures, including take down notices, alternative dispute resolution and court action. In 2022 23, the Attorney General’s Department undertook a Copyright Enforcement Review to assess ‘whether existing copyright enforcement mechanisms remain effective and proportionate’ (AGD 2022b). That review found that additional regulatory measures are needed to achieve an effective copyright enforcement regime, and work is currently underway to identify options for: • reducing barriers for Australians to use of the legal system to enforce copyright, including examining simple options to resolve ‘small value’ copyright infringements • improving understanding and awareness about copyright. (AGD 2023b) 

In light of this ongoing work, the issue of copyright enforcement is not in scope for this inquiry. 

Is there a case for a text and data mining exception? 

Another option is to expand the existing ‘fair dealing’ regime, which provides certain exceptions to the requirement to obtain permission from the copyright holder (box 1.6). Currently, there is no exception that covers AI model training per se (The University of Notre Dame Australia 2024). However, depending on the case, a different exception could apply. For example, AI models built as part of research could fall within the scope of the ‘research or study’ exception. 

Box 1.6 – What are fair dealing exceptions? 

Fair dealing exceptions allow for the use of copyright material without permission from the copyright owner, so long as it is used for one of several specified purposes and is considered fair. What are the specified purposes? The Copyright Act specifies several purposes where the exception may apply. These include: research or study, criticism or review, parody or satire, reporting news, and enabling a person with a disability to access the material (Copyright Act 1968 (Cth), Part III, Div 3; Part VIA, Div 2). 

What counts as ‘fair’? 

Fairness is determined with regard to all the relevant circumstances – that is, it depends on the facts. Some purposes have specified criteria that must be taken into account. For example, where the use is for research or study, the following considerations apply: • the purpose and character of the dealing • the nature of the work • whether the work can be obtained within a reasonable time at an ordinary commercial price • the effect of the dealing upon the potential market for, or value of, the work • how amount and substantiality of the work that was copied (Copyright Act 1968 (Cth), s 40(2)). 

The ‘fair use’ doctrine – an alternative approach 

Some overseas jurisdictions (notably the United States) take a ‘fair use’ approach to copyright exceptions. Under this doctrine, any types of use can be considered non infringing, provided that it is considered ‘fair’ – in other words, the use need not fall within one of several defined categories. Several reviews have recommended the adoption of the fair use doctrine in Australia (including by the Australian Law Reform Commission and the Productivity Commission), but this has not occurred. Source: ACC (2024b); ALRC (2013); Copyright Act 1968 (Cth); PC (2021, p. 187). 

In its report on Copyright and the Digital Economy, the Australian Law Reform Commission recommended amendments to enable text and data mining by adopting a fair use approach to copyright exceptions (box 1.6) – or, failing that, through a new fair dealing exception. It explained: There has been growing recognition that data and text mining should not be infringement because it is a ‘non expressive’ use. Non expressive use leans on the fundamental principle that copyright law protects the expression of ideas and information and not the information or data itself (2013, p. 261)  

The Australian Government has since indicated that it is not inclined to introduce a fair use regime (Australian Government 2017, p. 7). Therefore, the PC is considering whether there is a case for a new fair dealing exception that explicitly covers text and data mining (a ‘TDM exception’). TDM exceptions exist in several comparable overseas jurisdictions (box 1.7). 

Such an exception would cover not just AI model training, but all forms of analytical techniques that use machine read material to identify patterns, trends and other useful information. For example, the use of text and data mining techniques is common in research sectors to produce large datasets that can be interrogated through statistical analysis. 

Box 1.7 – Text and data mining around the world 

European Union: There are two text and data mining (TDM) exceptions embedded in the Digital Single Market Directive (EU 2019/790) – one for scientific research (article 3) and another for general use (article 4). The Artificial Intelligence Act (Regulation (EU) 2024/1689) specifically characterises the training of AI models as involving ‘text and data mining techniques’ (recital 105) and refers to the TDM exception (article 53). The recent case of Kneschke v. LAION [2024] endorsed the view that the TDM exception extends to cover AI training (Goldstein et al. 2024a, 2024b). 

United States: It has been argued that training AI models falls within the scope of the fair use doctrine (Khan 2024; Klosek and Blumenthal 2024). However, the case Thomson Reuters v. Ross [2023] 694 F.Supp.3d 467 highlights that whether AI training is covered by the doctrine depends on whether the fair use factors are met in the circumstances (ReedSmith 2025). 

United Kingdom: There is a TDM exception for that applies to non commercial research (UK Intellectual Property Office 2014). There have been proposals to expand the exception to cover all uses, though these are still under consideration (Pinsent Masons 2023; UK Government 2024). 

Japan: The Japanese Copyright Act includes broad statutory exemptions for TDM (article 30 4(ii)), provided the work is used for ‘non enjoyment’ purposes (Senftleben 2022, p. 1494). In essence, the requirement for ‘non enjoyment’ distinguishes between whether the work is being consumed as a work or as data, and is broadly equivalent to the distinction between expressive and non expressive uses. 

Singapore: The Singaporean Copyright Act includes a specific TDM exception, as well as a broader fair use exception (Ng-Loy 2024). 

To assist its consideration of this option, the PC is seeking feedback about the likely effects of a TDM exception on the AI market, the creative sector and productivity in general – particularly in light of the following considerations. • At present, large AI models (including generative AI and large language models) are generally available to be used in Australia. The introduction (or not) of a TDM exception is unlikely to affect whether AI models continue to be available and used in Australia (PC 2024c, p. 13). • At present, large AI models are trained overseas, not in Australia. It is unclear whether the introduction of a TDM exception would change this trend. • As discussed above, large AI models are already being trained on unlicensed copyrighted materials. • A TDM exception could make a difference to whether smaller, low compute models (such as task specific models) can be built and trained in Australia, such as by Australian research institutions, medical technology firms, and research service providers. It should also be noted that a TDM exception would not be a ‘blank cheque’ for all copyrighted materials to be used as inputs into all AI models. As discussed in box 1.4, the use must also be considered ‘fair’ in the circumstances – this requirement would act as a check on copyrighted works being used unfairly, preserving the integrity of the copyright holder’s legal and commercial interests in the work. There may be a need for legislative criteria or regulatory guidance about what types of uses are likely to be considered fair. 

Information request 1.1 

The PC is seeking feedback on the issue of copyrighted materials being used to train AI models. • Are reforms to the copyright regime (including licensing arrangements) required? If so, what are they and why? The PC is also seeking feedback on the proposal to amend the Copyright Act 1968 (Cth) to include a fair dealing exception for text and data mining. • How would an exception covering text and data mining affect the development and use of AI in Australia? What are the costs, benefits and risks of a text and data mining exception likely to be? • How should the exception be implemented in the Copyright Act – for example, should it be through a broad text and data mining exception or one that covers non commercial uses only? • Is there a need for legislative criteria or regulatory guidance to help provide clarity about what types of uses are fair?

Platforms

'Consent as Friction' by Nikolas Guggenberger in. (2025) 66 B.C. Law Review comments 

The leading technology platforms generate several hundred billion dollars annually in revenue through algorithmically personalized advertising—with pernicious effects on our privacy, mental health, and democracy. To fuel their data-hungry algorithms, these platforms have long conditioned access to their services on far-reaching authorizations, embedded in boilerplate terms, to extract their users’ data. Until recently, privacy-sensitive alternatives were unavailable—even for a premium. Users faced a stark choice: submit to surveillance or forgo digital participation. I term this business practice “surveillance by adhesion.” 

In July 2023, however, the European Court of Justice ruled in Meta Platforms Inc. v. Bundeskartellamt that surveillance by adhesion violated the European Union’s General Data Protection Regulation. To comply with the EU’s new regulatory paradigm, the leading (predominantly American) platforms must fundamentally revise their business models by either abandoning personalized advertising or obtaining individuals’ informed consent. In practice, the EU’s stringent guard-rails—which mandate providing users with “real choice” beyond mere consent pop-ups and granular control—may render user consent so onerous to secure, precarious to sustain, restrictive to operationalize, and prone to litigation that they undermine the commercial viability of personalized advertising. Rather than empowering users to exercise control over their data, the consent mechanism may thus manifest as a vehicle for welcome friction, prompting a shift toward less invasive contextual advertising. 

Building on these insights, this Article contends that U.S. policymakers and regulators should, and indeed can, likewise leverage consent as friction to undermine the economic viability of personalized advertising and other harmful surveillance-driven business models. This approach offers a pragmatic alternative to failed notions of user control over data, especially as democratic data governance too often remains beyond reach. Although the EU’s new regulatory paradigm offers one model, there are multiple avenues to harness consent as a source of friction across different legal contexts. In fact, state-level biometric privacy laws exemplify this strategy’s efficacy domestically. Their qualified consent requirements have thrown so much sand in the gears of biometric data collection and use that several leading technology companies have refrained from launching intrusive facial recognition applications altogether. By adopting this friction-based strategy, the Federal Trade Commission and state privacy enforcers can effectively establish potent data usage limitations. 

Scams

The Scams Prevention Framework Bill has passed through the national legislature. The expectation is that it will set out consistent and enforceable obligations for businesses in key sectors, with overarching principles for compliance by all members of designated sectors. 

The ACCC has announced that the Commission will 'closely monitor regulated entities’ compliance with principles to prevent, detect, disrupt, respond to and report scams. The legislation empowers the ACCC to investigate potential breaches and take enforcement action where entities do not take reasonable steps to fulfill obligations under the principles, with fines of up to $50 million and scope for consumers to seek redress from regulated businesses. The ACCC will be involved in development of the formal designation of sectors, sector codes, and consumer and industry guidance. The initial sectors will be banks, certain digital platforms (including social media) and telecommunications providers. 

 Under the Framework, the ACCC will enforce the digital platforms sector scams code and take enforcement action where digital platforms breach obligations. The Australian Securities and Investments Commission will be the regulator for the banking sector code. The Australian Communications and Media Authority will be the regulator for the telecommunications sector code. There will be a single external dispute resolution body under the new Framework, involving the Australian Financial Complaints Authority (AFCA). 

A Treasury Minister may, by legislative instrument, designate one or more businesses or services to be a regulated sector for the purposes of the Framework. This designation instrument is subject to Parliamentary scrutiny through the disallowance process and sunsetting. The Treasury Minister may designate an individual business or service, or designate businesses or services by class, meaning that the Minister may in effect designate specific entities to be a 'regulated sector' within a designation instrument. 

 Without limiting the businesses or services that may be designated, a Treasury Minister may designate the following classes of businesses or services to be a regulated sector (or a subset of those business or services): 

 • banking businesses, other than State banking (within the meaning of paragraph 51(xiii) of the Constitution) not extending beyond the limits of the State concerned; 

• insurance businesses, other than State insurance (within the meaning of paragraph 51(xiv) of the Constitution) not extending beyond the limits of the State concerned; 

• postal, telegraphic, telephonic or other similar services (within the meaning of paragraph 51(v) of the Constitution), which can include, but is not limited to: - carriage services within the meaning of the Telecommunications Act; - electronic services within the meaning of the Online Safety Act 2021, such as social media services within the meaning of that Act; - broadcasting services within the meaning of the Broadcasting Services Act 1992. 

 The description of the businesses and services are based on the relevant constitutional heads of power and provide flexibility for the Framework to be expanded to a wide range of sectors over time. It is not intended to provide a roadmap of the exact sectors the Government is proposing to designate. The Government's intention is to initially designate telecommunications services, banking services and certain digital platform services. 

 Before designating a sector to be subject to the Framework, the Minister must consider all the following matters: 

 • Scam activity in the sector. For example, the Minister may identify that certain businesses or services experience high levels of scam activity.   

• The effectiveness of existing industry initiatives to address scams in the sector. For example, there may be existing initiatives in a sector seeking to protect against scams but do not appropriately address scam  activity in that sector.   

• The interests of persons who would be Framework consumers of regulated services for the sector if the Minister were to make the designation. For example, designation may be appropriate if the Minister considers that consumers would be better protected against scams arising out of activity in a sector if it is subject to the Framework, rather than relying on existing frameworks.   

• The likely consequences (including benefits and risks) to the public and to the businesses or services making up the sector if the Minister were to make the designation.   

• Any other matters the Minister considers relevant to the decision to designate a sector to be subject to the SPF. For example, this could include the compliance and regulatory costs of designating sectors, the privacy or confidentiality of consumers' information, the regulatory impact of designation, the outcomes of consultation with impacted entities and consumers, and scam activity in the relevant sector in another jurisdiction. 

 Before designating a sector, the Minister must also consult relevant consumer groups and the businesses or services making up the sector, or such associations or other bodies representing them as the Minister thinks appropriate. Given the nature and scope of the requirements under the Framework, this is 'appropriate to ensure consumers and affected entities are given notice of the Government's intention to designate the relevant sector. It will also provide these stakeholders with an opportunity to give feedback on the details of the designation instrument, including on any application provisions or transition period before the SPF comes into effect for the sector'.

What is a 'Scam'? The legislation seeks to provide certainty on the scope of harms intended to be captured by the Framework, with a scam being a direct or indirect attempt (whether or not successful) to engage an  Framework consumer of a regulated service where it would be reasonable to conclude that the attempt: 

 • involves deception; and 

• would, if successful, cause loss or harm including the obtaining of SPF personal information of, or a benefit (such as a financial benefit) from, the SPF consumer or the SPF consumer's associates. 

 The elements of the definition of 'scam' are objective in nature and do not require the scammer's state of mind to be established. This definition is deliberately broad to capture the wide range of activities scammers engage in and their ability to adapt and to adopt evolving behaviours over time. The Framework rules can also provide an appropriate safeguard to exclude conduct that is not intended to be captured under the Framework. 

 The definition of scam captures both successful scams which have caused loss or harm to a Framework consumer, and scam attempts which have not yet resulted in loss or harm to a Framework consumer. This reflects the obligations in the principles, which require regulated entities to take action against scams, regardless of whether the scam has resulted in loss or harm to a Framework consumer or an associate of the consumer. The use of 'attempt' in the definition of scam has its ordinary meaning, which is intended to cover efforts made to engage a Framework consumer. There may be an attempt to engage a Framework consumer even if the attempt is indirect, such as where it is directed at a cohort which includes the consumer or is directed at the public more generally. The attempt to engage an SPF consumer may be a single act or a course of conduct. 

 The legislation introduce the concept of an 'SPF consumer'. The obligations imposed on regulated entities are often in relation to a Framework consumer. This is intended to clearly set out the scope of obligations under the Framework and who they are designed to protect.  A Framework consumer of a regulated service is: • a natural person, or a small business operator, who is or may be provided or purportedly provided the service in Australia; or • a natural person who is ordinarily resident in Australia and is or may be provided or purportedly provided the service outside of Australia by a regulated entity that is either an Australian resident or is providing or purportedly providing the service through a permanent establishment in Australia.  The meaning of 'Australian resident' and 'permanent establishment' with respect to the regulated entity in this context leverages the existing established definitions in the ITAA 1997. 

A Framework consumer is intended to cover any natural person or small business operator who is in Australia when they are provided the regulated service, regardless of where that service is based (for example, the regulated service may be based overseas). This includes natural persons who are only temporarily in Australia. The definition also intends to cover any natural person who is ordinarily resident in Australia but is overseas when they are provided a regulated service that is based in Australia. A Framework consumer could be 

 • an Australian resident in Australia using either an Australian-based or overseas-based messaging service that is offered in Australia; 

• a person ordinarily resident in Australia who is overseas but using an Australian-based banking service; or 

• a tourist visiting Australia using an Australian-based or overseas-based telecommunication service that is offered in Australia. 

 It is not intended that a foreign entity will be regulated with respect to consumers in foreign markets. For example, where an Australian consumer is overseas and is impacted by a scam on a social media service offered by an entity based overseas, this is not intended to be within the scope of the Framework. 

 Small businesses are not excluded from being Framework consumers based on their corporate structure. The small business may be in the form of a sole trader, company, unincorporated association, partnership or trust. Whether a small business is a small business operator for the purposes of the Framework will differ slightly depending on whether the small business is a body corporate or not.  

If a small business is a body corporate, it is a small business operator if it meets all of the following conditions: • the sum of the business' employees and the employees of any body corporate related to the business, is less than 100 employees; • the annual turnover of the business during the last financial year is less than $10 million; and • the business has a principal place of business in Australia.   If a small business is not a body corporate, it is a small business operator if it meets all of the following conditions: • the business has less than 100 employees; • the annual turnover of the business, worked out as if the person were a body corporate, during the last financial year is less than $10 million; and • the business has a principal place of business in Australia.

Critique

'Free the Market: How We Can Save Capitalism from the Capitalists' by Mark A Lemley in (2024) 76(1) Hastings Law Journal comments 

The free market works because no one person or company is making the decisions. In a competitive market, businesspeople make the wrong decisions all the time, just as central planners do. But the consequences of those decisions don’t infect the market as a whole. Businesses that guess wrong lose money or go out of business. But as long as there is a competitor out there who guesses right, the market provides people what they want. 

But it turns out that the very last thing capitalists want is a free market. Capitalism may thrive under conditions of robust market competition, but most capitalists don’t. They would much rather operate in an environment free from government restraint but also free from the discipline of a truly competitive market. 

Unfortunately, we have obliged them. At every turn, we have allowed the dominant forces in a market to erect barriers to protect themselves from being dislodged and to maximize their own profits at the expense of everyone around them. The result has been that while we have a capitalist economy, we no longer have a free market. Nearly every market sector is less competitive today than it was fifty years ago. We have centralized control over important sectors of the economy in a handful of companies. And we have given them the tools to use that control to prevent new competition, to make it hard for consumers to take advantage of what competition there is, to drive down wages, and to extract as much short-term profit as possible rather than invest in long-term productivity. Late-stage capitalism isn’t the free market run amok. It is the capture of markets by actors who have a vested interest in making sure there is no free market. And the consequences have been dire, not only for consumers, but for inequality and political stability in the U.S. and throughout the world. 

The good news is that we have the tools to reverse that process and to free the market—and many of them are legal tools. These are big problems; much bigger than the law. But many of these problems are traceable to our failure over the past forty years to enforce legal rules that regulate markets. Enforcing the antitrust laws we already have will make a good start at undoing this harm. There are also a number of other laws we can pass that can help free the market, restricting mergers, opening markets, protecting consumers from corporate efforts to block consumer access to information, and ensuring a free market for employees. And one agency—the Federal Trade Commission—has both the authority and the motivation to open markets to competition. In this paper, I discuss the ways in which capitalists have prevented market competition and how we can reverse those changes.

Unconscionability

Having used a similar fact pattern in teaching unconscionability and estates I was interested to see Bosschieter v Howitt [2024] NSWSC 1676. 

 In that judgment the Court states 

Margaret Norma Howitt died from Covid 19 on 24 February 2022 aged 93. After making several specific gifts, in her will of 2 March 2021 the deceased divided the substantial remaining asset of her estate, her house in the Sydney suburb Forestville, equally five ways among her four children and one of her grandchildren, the plaintiff, Justine Bosschieter. She gave the plaintiff a first testamentary right to purchase the Forestville property, provided the plaintiff paid 80% of its market value to the four children, the other major beneficiaries. 

The plaintiff did not exercise her testamentary right to purchase the Forestville property, which was sold for $2,850,000. The balance of the deceased’s estate is now held in cash. On 8 May 2023, this Court granted probate of the deceased’s estate to the defendant, David Howitt, one of Margaret Howitt’s children. 

In these proceedings the plaintiff seeks an order under Succession Act 2006, s 59 for further provision out of her grandmother’s estate. She claims she needs more than was provided to her under the deceased’s will to enable her to buy a house and to provide her with a cushion against the contingencies of life. 

On behalf of the estate, the defendant resists the plaintiff’s claim and contends that no further provision should be made for her from the estate. The defendant puts in issue whether the plaintiff qualifies as an “eligible person” under the Succession Act, whether there are factors warranting the making of an order for further provision out of the deceased’s estate, and he contends that adequate provision for the plaintiff’s proper maintenance education and advancement in life has already been made under the deceased’s will. 

The defendant also cross claims to set aside a gift the plaintiff contends that the deceased made to her approximately 3-months before her death. The deceased and the plaintiff had together attended a branch of a bank, the Commonwealth Bank of Australia (CBA), where the deceased closed a recently matured term deposit held in her name. This term deposit in the sum of $202,247.29 represented the deceased’s then lifesavings. The term deposit was transferred into the plaintiff’s name. Since then, the plaintiff has applied these funds to various objects. 

The defendant/cross-claimant contends that the transfer of the deceased term deposit was not voluntary but was the product of the plaintiff’s undue influence or unconscionable conduct. The defendant/cross-claimant seeks to have the transfer set aside and consequential orders made that these funds should be repaid to the estate. If the plaintiff/cross-defendant is otherwise successful in her claim, the defendant/cross-claimant claims that the transfer should be designated as notional estate under the Succession Act Part 3.3 and treated as satisfying the plaintiff’s claim. ...

The judgment subsequently states 

In October 2020 Justine took the deceased down to the CBA to request a new ATM card for the deceased’s account. The deceased was out of breath and in some physical distress due to her exertion and lack of oxygen by the time she got to the bank. The bank manager refused to issue card to Justine and the deceased as he was concerned about its potential misuse. Justine was not the deceased’s attorney. It appears that because of this Justine resolved to become the deceased’s attorney. 

In November 2020, the deceased appointed Justine as her enduring Attorney and as her enduring Guardian, in place of the March 2018 appointment of her four children to these roles. Shortly, thereafter she executed her final will in March 2021, which gave Justine and her children one fifth each of the Forestville property and her residuary estate. During this period the deceased was generally isolated due to the pandemic and being cared for by Justine. Her general health was declining as this section of these reasons finds. 

On 10 March 2021 the deceased obtained a medical certificate from her doctor regarding her inability to go to the bank. The doctor said that she suffered “from an end-stage medical condition” and that “she is housebound, frail, and susceptible to infections. She is not able to attend any community appointments including banks and shops.” This medical certificate raises real questions as to why Justine needed to take the deceased to the CBA in November that year. ... 

On 17 November 2021, during Covid-19 restrictions, Justine and Luke drove the deceased with her oxygen tank, to the CBA branch at Frenchs Forest. Whilst at the CBA, the deceased and Justine attended on Mr Nickson Adamson a bank manager with the CBA. 

Mr Adamson was not called to give evidence. During their attendance on Mr Adamson, the deceased caused the sum of $202,247.29 from a matured term deposit account in her name to be transferred into her personal account. Then shortly afterwards the deceased caused the funds to be transferred from her personal account into a term deposit account in Justine’s name. ...

The Court states that it 

does not accept Justine’s evidence that the deceased spontaneously wanted her to have the $200,000. Justine has not provided any written evidence supporting her contention that the deceased intended for her to have the term deposit funds. The deceased did not act on the independent advice of Ms Ghadirian-Marnani when she transferred the term deposit funds to Justine. From the evidence available, it is apparent that the deceased had considered gifting Justine the term deposit but not including her in the will, but ultimately decided against that course. 

However, it is now Justine’s case that the deceased’s intention was for to receive the term deposit and her entitlement under the will. The Court does not accept the deceased freely intended that course. 

Moreover, it was clear that at the time the term deposit funds were transferred to Justine from the deceased in November 2021, that there was a strong relationship of trust and confidence between Justine and the deceased. Justine was not only the deceased’s carer, but the deceased had appointed her as her enduring guardian and attorney. Appointment to these positions is only explicable based on the deceased reposing a high degree of trust, confidence and dependence upon Justine to act in her best interests. ... 

Justine commenced these proceedings on 9 February 2023. Her supporting affidavit foreshadowed the case made on her behalf. Justine seeks further provision from the deceased’s estate so she could buy her own home, by a good quality second-hand car top up her savings account with the contingency for future unplanned expenses of $250,000 and top up her superannuation in the sum of $150,000 and provide a fund for future medical expenses of $100,000. 

Probate of the deceased’s will was granted to David on 8 May 2023. Between June and August 2023, he made attempts were made to ascertain from Justine whether she would seek to exercise her right of first refusal to purchase the property. The estate’s solicitors took steps to realise the Forestville property. Justine resisted these steps adding unnecessarily to the cost of administering the estate the administration of the estate. Justine did not reply to letters from the estate of 13 April 2022, 24 October 2022, 24 November 2022 and 19 April 2023. No reasonable excuse was offered by Justine for ignoring the estate’s correspondence inquiring when she would be vacating the Forestville property. 

On 26 May 2023, the estate filed its Cross Claim seeking repayment of the November 2021 $200,000 transfer to Justine on the basis that Justine procured the transfer by undue influence and/or unconscionable conduct. Alternatively, should the transfer be found to be a valid act of the deceased, the estate seeks that the transfer ought to satisfy any entitlements to further provision from the estate which Justine is found to have. ... 

Equity students will note the discussion of unconscionability - 

The Cross Claim contends that the transfer was procured by presumed or actual undue influence that Justine had over the deceased and/or Justine’s alleged unconscionable conduct. The presumed undue influence is alleged to have arisen out of the circumstances of the relationship between Justine and the deceased and the ascendancy and dominance Justine had over the deceased. 

Unconscionable Conduct. 

The applicable legal principles in relation to the estate’s claim of unconscionable conduct may be shortly stated. The elements required for a court to conclude that unconscionable conduct has occurred were extracted in summary form from Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461-462 and other cases decided in the High Court and restated in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49, at [38] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ) as follows (omitting case references):

“A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests". The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimisation", "unconscientious conduct", or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.”

More recently the necessary elements of unconscionable conduct were summarised in Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 at [147] (per Ward P, with whom Bell CJ and White JA agreed):

“What is clear is that, once the requisite elements of a special disadvantage, knowledge of that special disadvantage and improvidence of the transaction are established, there is at least an evidentiary onus on the stronger party to show that the transaction was fair, just and reasonable or it may more readily be concluded that the improvident transaction was procured by the unconscientious taking of advantage of that special disadvantage.”

Other general statements of legal principle should be noted. Unconscionability is a concept that is applied with considerable restraint, going beyond what is 'fair' or 'just' to circumstances which are highly unethical: Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; [2005] NSWCA 261, at [120] – [121] per Spigelman CJ. 

There are many statements to similar effect. One such comprehensive statement is that of Allsop P (with whom Bathurst CJ and Campbell JA agreed) in Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O’Donnell (2011) 15 BPR 29,699; [2011] NSWCA 389 at [291], which also discusses how the concept of unfairness and unconscionability under the CRA may be differentiated from unconscionability at general law:

“Aspects of the content of the word "unconscionable" include the following: the conduct must demonstrate a high level of moral obloquy on the part of the person said to have acted unconscionably: Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261; 63 NSWLR 557 at 583 [121]; the conduct must be irreconcilable with what is right or reasonable: Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226; 148 FCR 132 at 140 [30]; Australian Competition and Consumer Commission v Samton Holdings Pty Ltd [2002] FCA 62; 117 FCR 301 at 316-317 [44]; Qantas Airways Ltd v Cameron [1996] FCA 1483; (1996) 66 FCR 246 at 262; factors similar to those that are relevant to the [Contracts Review Act] are relevant: Spina v Permanent Custodians Ltd [2009] NSWCA 206 at [124]; the concept of unconscionable in this context is wider than the general law and the provisions are intended to build on and not be constrained by cases at general law and equity: National Exchange at 140 [30]; the statutory provisions focus on the conduct of the person said to have acted unconscionably: National Exchange at 143 [44]. It is neither possible nor desirable to provide a comprehensive definition. The range of conduct is wide and can include bullying and thuggish behaviour, undue pressure, and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery, or misleading conduct. A finding requires an examination of all the circumstances.”

Other authorities also speak to the great variety of circumstances in which equitable intervention to relieve against unconscionable conduct is available and the need for close scrutiny of the exact relationships established between the parties: Jenkyns v Public Curator (Queensland) (1953) 90 CLR 113; [1953] HCA 2 at 118-119 and Karavaz v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [18] and Wu v Ling [2016] NSWCA 322 at [8] per Leeming JA. In Wu v Ling Leeming JA explained (at [7]) that one should not expect to find a bright line separating circumstances which place an impugned transaction inside or outside the reach of equitable principle. Leeming JA cited Lord Selborne’s rejection of the notion that there is an “indispensable condition of equitable relief”: Earl of Aylesford v Morris (1873) LR Ch App 484, at 491 and referring to Fullagar J’s statement in Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, at 405, that the circumstances in which equitable relief will be granted “are a great variety and can hardly be satisfactorily classified”. 

But this also means, as Leeming JA further explained in Wu v Ling (at [8]) that the absence of proof of immoral or dishonest motives is not sufficient to preclude equitable intervention: cf Johnson v Smith [2010] NSWCA 306 at [5] and [98] – [102]; and Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199; [2015] FCAFC 50 at [305]. 

Undue Influence. 

The principles to be applied in evaluating a claim for alleged undue influence may also be shortly summarised. A claimant may seek to set aside a transaction by showing that another party had, in fact, come to occupy or assume a position of practical ascendency, power or dominion over the claimant who had taken a co-relative position of dependence or subjugation: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) at paragraph 15-105. Making out a relationship of actual undue influence involves establishing a relationship involving ascendancy or influence on the part of one person over another and that other is in a position of dependence, reliance, trust, or confidence on the stronger party: PW Young, C Croft, ML Smith, On Equity (2009, Thomson Reuters) at [5.440]. Much of the Australian and English law on this subject finds its origins in the classic statements of relevant legal principle in Allcard v Skinner [1887] UKLawRpCh 151; (1887) 36 Ch D 145. 

The applicable law in relation to undue influence in Australia was comprehensively stated and applied by the High Court in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 at [34] (“Thorne”) as follows (omitting citations):

“There are different ways to prove the existence of undue influence. One method of proof is by direct evidence of the circumstances of the particular transaction. That was the approach relied upon by the primary judge in this case. Another way in which undue influence can be proved is by presumption. This presumption was relied upon by Ms Thorne in this Court as an alternative. A presumption, in the sense used here, arises where common experience is that the existence of one fact means that another fact also exists. Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a "substantial benefit" to another, which cannot be explained by "ordinary motives", or "is not readily explicable by the relationship of the parties".

Although the classes are not closed, in Johnson v Buttress Latham CJ described the relationships that could give rise to the presumption as including parent and child, guardian and ward, trustee and beneficiary, solicitor and client, physician and patient, and cases of religious influence. Outside recognised categories, the presumption can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust. In either case, the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party's free will. 

Thorne discussed (at [36]) whether the relationship of fiancé and fiancée should be recognised as one to which the presumption of undue influence attaches. The relationship between a granddaughter such as Justine and her grandmother, the deceased, is not one of the traditionally identified presumptive relationships of influence and is not treated as such a presumptive relationship in these reasons. Here, the method chosen to determine whether the relationship between Justine and the deceased was one of actual undue influence is to look to the direct evidence of the transaction and the relationship between the parties from the narrative of findings above. 

In Amadio, Mason J also drew a distinction (at 461) between a transaction that is sought to be set aside on the grounds of unconscionable conduct, and one that is sought to be set aside on the grounds of undue influence: 

“Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position. 

There is no reason for thinking that the two remedies are mutually exclusive in the sense that only one of them is available in a particular situation to the exclusion of the other. Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.” 

Deane J also explained in Amadio (at 474) that undue influence “looks to the quality of the consent or assent of the weaker party” whereas “unconscionability looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, dealing with the person under a special disability in circumstances where it is not consistent with equity and good conscience that he should do so”. 

Recent United Kingdom legal authority has tended to simplify the remedy for undue influence. That authority states that there are two principal requirements to make out a case to establish a rebuttable presumption of undue influence – first there must be a relationship of influence, and second, the transaction must not be readily explicable on ordinary motives, such that the nature and contents of the transaction must in the context of the relationship of influence, absent evidence to the contrary, make one conclude that undue influence has been exercised: Nature Resorts Ltd v First Citizen Bank Ltd [2022] 1 WLR 2788, [2022] UKPC 10[11] – [13] and Royal Bank of Scotland plc v Etridge (No. 2) [2002] 2 AC 773; [2001] UKHL 44. The relationship of influence may be established on the facts that the gift was a result of influence expressly used by the done. But in respect of some relationships what is commonly referred to as a rebuttable legal presumption of a relationship of influence arises.

CISG

'Fantastic Precedents and Where to Find Them: An Argument for Limiting the Operation of Common Law Binding Precedent Rules When Interpreting the UN Sales Convention (CISG)' by Benjamin Hayward in (2024) 47(4) UNSW Law Journal comments 

 The United Nations Convention on Contracts for the International Sale of Goods’ (‘CISG’) trade facilitation purpose is undermined by divergent State interpretations. Homeward trend CISG interpretations, and the duty to consult international CISG precedents, are well-travelled ground. Common law precedent’s effect in perpetuating the homeward trend (and precluding reference to international case law), however, has not yet been satisfactorily examined. My analysis offers a novel interpretation of CISG article 7(1): it negates the binding effect of local CISG precedent that is inconsistent with its terms. This interpretation allows judges in both common law and civil law States to freely consult foreign CISG case law. Using an Australian case study, I show that neither of two potential public law objections (the principle of legality and the separation of powers) affect my argument. Comments are offered concerning my argument’s generalisability to other common law States, arbitration, and other private international law instruments.

Software

'On Software Bugs and Legal Bugs: Product Liability in the Age of Code' (Indiana Legal Studies Research Paper No. 535) by Asaf Lubin comments 

Despite software’s ubiquity in modern life, its classification within product liability law remains unsettled. Is software a product, a service, a good, a component, a medium, a force, or something else altogether? Under the Restatement (Third) of Torts a product is defined as a “tangible personal property distributed commercially for use or consumption.” But has this definition been embraced by states? And how has it been applied in the Courts, since its adoption some 26 years ago? 

Through a 50-state survey and the canvassing of all relevant case law, the paper reveals widespread doctrinal inconsistencies within the common law. Some states adopt restrictive definitions of “product” tied to tangibility, while others take broader approaches or leave the term undefined, creating uncertainty in software-related claims. Judicial decisions further complicate this landscape, with courts diverging on whether software qualifies as a product, particularly in cases involving embedded or cloud-based solutions like software-as-a-service. 

The paper contrasts U.S. law with the 2024 European Union Product Liability Directive, which redefines software and artificial intelligence as products, establishing a forward-looking framework that imposes strict liability for software defects. This stark divergence exposes the U.S.’s failure to modernize its legal frameworks, forcing courts to rely on outdated definitions that inadequately address the risks posed by emerging technologies. By lagging behind Europe, the U.S. cedes its historic role as a pioneer in tort law, creating a regulatory vacuum that prioritizes developer interests over consumer safety and undermines global trust in its ability to regulate the digital economy effectively

Digital Competition Policy

The Australian Treasury has released a proposal paper on A new digital competition regime. 

The paper states 

 1. Why do we need a new competition regime for digital platforms? The digitisation of the economy through the services offered by digital platforms has provided significant benefits for Australian consumers and businesses. However, the rise and dominance of large international platforms, their market power and ability to restrict competition, and their central role in facilitating interactions between businesses and consumers, have also created important regulatory challenges. 

Australian businesses rely heavily on a few global digital platforms and the services they provide to access and engage with consumers. The significant market power of these platforms provides them with the ability to impose ‘take it or leave it’ terms on businesses and make unilateral decisions that have significant consequences for Australian businesses and flow-on effects for broader commerce. These include direct financial impacts for Australians, where increased costs are passed on to consumers. 

There are multiple other examples of common pain points for Australian consumers and businesses. These include search engines and app stores preferencing their own products and services above those of rival businesses in rankings and search results; difficulties for a consumer trying to switch to a new brand of phone without losing data; difficulties for a small business trying to understand how their digital advertising dollars are being spent and whether they are getting value for money; and restrictions on app users trying to access payment options other than those offered by app store providers, including options which may offer cheaper prices on in-app purchases. 

The Australian Competition and Consumer Commission (ACCC) has examined competition and consumer issues regarding digital platforms in Australia since 2017. Throughout the ACCC’s current Digital Platform Services Inquiry (2020 – 2025) (DPSI), the ACCC has identified a lack of effective competition in a range of digital platform services. The ACCC has also observed that the positions of substantial market power held by large digital platforms give them the ability and incentive to engage in strategic conduct to entrench and extend that market power. These systemic issues can impact businesses and consumers through higher prices, reduced choice, and lower innovation and quality of products and services. 

The characteristics and dynamic nature of digital platform markets mean that enforcement of existing economy-wide provisions of the Competition and Consumer Act 2010 (Cth) (CCA) may not on its own be sufficient to protect and promote competition, or well-suited to addressing the range and scale of competition harms identified in digital platform markets. Further, the fast-moving nature of digital platform markets may mean that significant, and sometimes irreversible, damage to Australian businesses or consumers can occur, even where a successful outcome is achieved through litigation. The ACCC recommended the government implement a new digital competition regime with ‘ex ante’ or upfront rules.  Ex ante upfront rules aim to prevent anti-competitive conduct from occurring in the first place. Traditional ‘ex post’ competition frameworks intervene after anti-competitive conduct has occurred, when consumers may have already experienced losses and competition has been stifled. Multiple jurisdictions around the world have arrived at the same conclusion that traditional competition law is insufficient in addressing these issues. The European Union, the United Kingdom, Germany, Japan, India and Brazil have implemented or proposed new digital competition regimes with ex ante upfront rules. In the jurisdictions that have already implemented reforms, governments are expecting consumers to directly benefit from greater competition in digital platform services. For example, the European Commission has estimated a consumer benefit of EUR 13 billion (AUD 21.4 billion) per year, and the UK Government has estimated a consumer benefit of GBP 798 million (AUD 1.5 billion) per year. 

Treasury consulted on the ACCC’s recommendations from 20 December 2022 to 15 February 2023. Following Treasury’s consultation, the government released its response to the ACCC’s recommendations on 8 December 2023. 

The government accepted the ACCC’s findings that existing provisions by themselves are not sufficient to address current or potential future competition harms and supported-in-principle the development of a new digital competition regime. The government’s consideration of a new digital competition regime sits within the broader context of work underway in Australia to address issues and harms related to digital platforms. The proposed regime would complement the new Scams Prevention Framework being considered by Parliament, implementation of the government’s response to the Privacy Act Review, the passing of Digital ID laws, work regarding the News Media and Digital Platforms Mandatory Bargaining Code, and ongoing work related to artificial intelligence. These efforts seek to ensure Australia has the right regulatory settings for the digital economy. 

Purpose of consultation 

This proposal paper seeks stakeholder views on the proposed approach to implement the government’s response to recommendations for a new digital competition regime. 

Your feedback will inform the government’s consideration of the design of a proposed new digital competition regime and more broadly, how to regulate digital platform harms while still positioning Australia as an attractive economy for digital innovation. 

By ensuring Australia has the right regulations to be a leading digital economy, Australian consumers, businesses and the economy can continue to enjoy the benefits and opportunities afforded by technology. 

A consolidated list of questions can be found at section 7.1. 

2. The proposed framework and legislative approach 

The proposed framework would introduce new, upfront requirements for certain ‘designated’ digital platforms with a critical position in the Australian economy. 

Amendments to the CCA would establish overarching principles, the ability to designate identified digital platform entities in respect of a specific service, broad obligations, enforcement and compliance mechanisms, and a framework for making subordinate legislation with detailed obligations applying at the service-level. Once a digital platform entity has been designated in respect of a specific service, the ACCC would be responsible for enforcing the obligations. The legislation would set out the scope of digital platform services which would be subject to designation. 

It is proposed that the first services to be investigated for designation under the regime would be app marketplace services and ad tech services. Comment is also sought on whether social media services should be similarly prioritised. 

2.1. Overview of the government’s proposed approach 

Treasury has worked closely with the ACCC to develop the proposed framework and key features of a new digital competition regime. The proposed framework would introduce new, upfront requirements for certain digital platforms with a critical position in the Australian economy. These requirements would complement enforcement of existing competition law. 

As set out in Figure 1, the overarching framework would be established in primary legislation (likely the CCA) and supplemented by subordinate legislation (such as regulations): • Primary legislation would contain key features such as designation, broad obligations, enforcement and compliance mechanisms and a framework for making subordinate legislation, and • Subordinate legislation would impose further detailed obligations on specified digital platform services at the service level and would be developed by the government, in consultation with the ACCC. 

The framework would provide the ability to designate digital platform entities in respect of specific services in primary law and impose upfront obligations to address identified competition harms. The objective of the CCA is “to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection”. We consider this proposed new framework sits appropriately within this objective. Further principles would be included as part of the regime’s provisions to clarify the goals of the framework. 

The proposed new digital competition regime would be administered by the ACCC through pro-active monitoring and compliance arrangements, which would be supported by effective enforcement powers with international coordination. 

The proposed regime is intended to be a model that is fit-for-purpose for the Australian context whilst being complementary and cohesive with international approaches. It has been informed by significant international developments in digital platform regulation in jurisdictions such as the European Union, the United Kingdom, Germany, Japan, and India (summaries of some of these regimes are set out at section 7.2). 

As noted above, the proposed new digital competition regime sits within the context of other work underway in Australia by government to address policy issues and harms related to digital platforms, including scams, privacy reforms, the News Media and Digital Platforms Mandatory Bargaining Code, Digital ID and artificial intelligence. Treasury will engage with relevant agencies to ensure any new regulation is coherent with other policy work related to digital platforms. ... [schematic omitted] 

2.2. Scope of the proposed framework 

The proposed framework would address identified competition issues in specific digital platform services that are not adequately addressed within the current competition framework. The proposed regime would be targeted to certain digital platforms in respect of services that have a critical position in the Australian economy and where there is the greatest risk of competition harms. It is not intended to be applicable across the economy. To ensure the proposed regime is appropriately targeted, the legislation would specify what parts of the digital economy would be captured by the new regime. The term “digital platform services” is not currently defined in Australian legislation. The proposed regime would not adopt an all-encompassing general definition of “digital platform services”, as this is unlikely to provide adequate certainty for industry and may result in over-capture of services which are not the intended target of regulation. Instead, the proposed model draws on the current list-based approaches used in Australia and overseas. The Ministerial Direction for the ACCC to conduct the Digital Platform Services Inquiry 2020-2025 lists “digital platform services” including internet search engine services, social media services, online private messaging services, and electronic marketplace services. Internationally, the European Union’s Digital Markets Act features a broad list of ‘core platform services’ and India’s proposed Digital Competition Bill similarly specifies a list of ‘core digital services’.   It is proposed that legislation would stipulate a list of digital platform services that would be regulated under the regime. The proposed list would include the digital platform services listed in the Ministerial Direction for the Digital Platform Services Inquiry and could substantially align with the types of ‘core platform services’ subject to potential regulation under the European Union’s Digital Markets Act. For example, the list could include:

• app distribution services (app marketplace services) • digital content aggregation platform services • social media services • search engine services (including general and specialised search services) • electronic marketplace services (e.g. general online marketplace services) • video-sharing platform services • online private messaging services (including text messaging, audio messaging and visual messaging) • operating systems • web browsers • virtual assistants • cloud computing services • online advertising services (including ad tech services) • media referral services. 

At the same time, the digital competition regime should be capable of addressing new and emerging digital platform services resulting from changes to technology and market dynamics. To do so, the framework would include an ability to update the list of specified digital platform services. For example, following advice informed by the ACCC’s proposed compliance and monitoring functions and a consultation process, the relevant minister could specify additional types of digital platform services that would be subject to the new competition regime in subordinate legislation. 

 2.3. Priority services 

The ACCC’s inquiries into digital platform markets including the DPSI have uncovered harms on a number of digital platform services. Building on the extensive work completed by the ACCC, Treasury sought further feedback on priority harms and priority services during its previous consultation. Treasury has also engaged extensively with international counterparts developing or implementing new regulation to inform the focus for the digital competition regime. 

Throughout these processes, competition issues in the supply of app marketplaces and ad tech services were continually highlighted as priority concerns. In addition, ongoing and emerging concerns in the supply of social media services (including closed channel display advertising) might warrant action. The ACCC raised issues related to these services, including anti-competitive self-preferencing, anti-competitive tying, lack of transparency and the lack of interoperability between products and services. It is proposed that these would be the first services to be investigated for designation under the proposed framework. 

App marketplace services 

The Apple App Store and Google Play Store are the most significant app marketplaces in Australia. For developers to reach customers, they must comply with the relevant terms of service, including restrictions on the use of alternative in-app payment systems and strict terms of access. These app marketplaces are either mandatory to use or have entrenched use on the relevant mobile operating system (OS) in Australia. The ACCC found the importance of app marketplaces for developers, and Apple and Google’s dominance in mobile OS, gives these providers market power in mobile app distribution in Australia, and that it is likely that this market power is significant.   

App marketplaces have been a focus of international regulation, with both Japan and South Korea implementing specific regulation, and the European Union designating relevant app marketplace providers as part of the Digital Markets Act. Anti-competitive conduct in the supply of app marketplaces has also been the subject of numerous investigations and court proceedings by regulators and the business users of platforms. During Treasury’s consultation in 2022, a number of concerns were raised by stakeholders, including a lack of options for in-app payments, and issues with the app review process. 

Ad tech services 

Advertisers and publishers use technology services called ‘ad tech services’ to facilitate the buying and selling of digital display advertising through open display channels. Google is a major supplier of ad tech services in Australia, with products including Google Ads and Google Ad Manager. The ACCC completed the Ad Tech Inquiry in 2021, making a number of findings and recommendations related to the supply of ad tech services. 

Many Australian businesses, including small businesses, depend on the ad tech supply chain to sell advertising space online (publishers) and to purchase advertising space to target potential customers (advertisers). However, the ACCC found that there is a lack of transparency in the supply chain, and that Google’s vertical integration and strength in ad tech services has allowed it to engage in a range of conduct which has lessened competition over time and  entrenched its dominant position. Multiple international jurisdictions have also initiated investigations or court proceedings against Google in respect of alleged anti-competitive conduct in its supply of ad tech services. 

Social media services 

Social media platforms provide important services for all Australians and are key intermediaries for businesses and advertisers to reach consumers.   Significant concentration in this market can increase the risk of conduct that harms competition and consumers. Meta (through its Facebook and Instagram platforms) is the most significant and widely used supplier of social media services in Australia.  The ACCC found that Meta has significant market power in social media, and relatedly, has a strong position among social media platforms for display advertising services on closed channels.   Limited competition in the supply of social media services may result in consumers accepting terms and conditions that result in excessive data collection and use, which in turn provides dominant platforms with significant competitive advantages from its accumulation of data. 

With respect to closed channel advertising, the ACCC’s DPSI March 2023 interim report found some social media platforms do not offer advertisers sufficiently transparent or verifiable information about the performance of their advertisements. This can increase advertisers’ costs, which are ultimately passed on to consumers. Various issues in closed channel display advertising, such as a lack of transparency, price increases and poor customer service, were raised in Treasury’s consultation. Multiple international competition authorities have issued fines, investigations, or initiated proceedings against Meta in respect of alleged anti-competitive conduct in the supply of social media services, including its data practices.  Ex ante regulation in Germany and the European Union have also targeted competition concerns in the supply of social media services